Dr. Zeki Ergas
The world’s richest 500 individuals have a combined income that is greater than that of the poorest 416 million….
Redistributing 1.6 per cent of the income of the richest 10 per cent of the global population would provide the $300 billion needed to lift the one billion people living on less than a dollar a day out of extreme poverty.
Extreme poverty is one of the hot topics of our time.(1 In striking contrast, its opposite, extreme wealth, is non-existent as a subject - as if the two were completely unrelated or had nothing to with each another. That is, a priori, astonishing, even absurd, because it would be comparable or similar to (to give but a few obvious examples) discussing courage without mentioning cowardice, health while ignoring disease and generosity while remaining silent about avariciousness. There is little doubt that, somewhat like death, extreme wealth is one of the great taboo subjects of our time and it is legitimate, even appropriate, I believe, to ask ourselves why. Is it perhaps because extreme wealth, like beauty and genius, is considered to be a God-given gift and is thus better left alone or untouched? The Bible and the Koran (also the Buddhist and Taoist sacred texts) are clear in their affirmation that wealth and poverty are natural to the human condition. But the great religions of the world are also clear in their requirement that the wealthy share their wealth with the poor.
What about Western philosophical thought? In addition to the Bible, ancient Greek philosophers -- the pre-Socratics, Protagoras, Parmenides and Heraclitus, for example, Socrates and, above all, Plato and Aristotle -- are acknowledged to have been the foremost shaping influence of Western social and political institutions. Plato the idealist (his Utopia and Theory of Immortality) is the philosopher of what should be and Aristotle the pragmatist (his Ethics, Politics and Logic) of what is. Most Western social and political institutions are based on Aristotle’s theories but Plato exerts a stronger pull on our souls and spirits. We now know -- after the dismal failure of Marxism-Leninism in the Soviet Union and of Maoism in China – (2 that we shall never be able to build a Utopia or the Ideal City described in the Republic, and so we have unreservedly embraced
Aristotle’s idea, Democracy, which is more within the possibilities of flawed human beings. We must, however, remember that Aristotle didn’t harbour any excessive illusions about democracy, considering it inferior to both Monarchy and Aristocracy. But experience (many of the Greek city-states were ruled by tyrants) and wisdom led him to prefer it, because he was aware that, inevitably, given sufficient time, monarchy and aristocracy were bound to deteriorate into Oligarchy and Tyranny; whereas democracy, even when it deteriorated badly, still remained a democracy. In other words, among the three, only democracy can be reformed and is correctible.
If we look at the modern history of democracy, say the last two hundred-plus years since the establishment of the American democracy, events have confirmed Aristotle’s vision, as that is indeed what has happened, and continues to happen, in all democracies of the world. Democracy, like a pendulum, swings back and forth between corruption or deterioration and reform or correction. Today, the best, most advanced, form of democracy – one that combines political pluralism, economic liberalism, social welfare and international solidarity most effectively – is that practised by the Scandinavian countries. Despite appearances, American democracy is perhaps the worst because, as time passes, the pendulum swings less and less towards correction, and more and more in the direction of deterioration, making for a gradually worsening democracy. It is generally acknowledged that that is so mainly because of the growing and pernicious role of money in politics. And wealthy and extremely wealthy people, of course, largely and increasingly control money. So, concretely, in the United States, while economic scandals continue to be exposed, and a small number of white-collar criminals are brought to justice – perhaps the two biggest and most extreme cases in recent history are Enron, which was one of the largest energy companies in the world, and WorldCom, one of the largest telecommunications companies – (3 politics is more and more dominated by money, and that makes for a progressively worsening democracy.
The large multinational corporations (MNCs, including banks and insurance companies) routinely produce greater and greater profits running to billions of dollars annually. UBS, the largest Swiss bank, for example, has, for the first quarter of 2005, generated a net profit of more than $2 billion (which translates as roughly $8 billion annually). In significant part this profit derives from speculative activities, such as, currency trading, futures, options and hedge funds (that possibly constitutes a third of the global profit; another third from interest rate differentials between what is paid to depositors and what is charged to clients, and a final third from fees for providing advice and services to its customers). The extremely wealthy are the principal clients of these operations. One way or the other – in the form of dividend payments and stock price increases which reflect profits that are used to buy other banks
– the big stockholders, who are extremely wealthy, get the lion’s share of these profits. The New York Times reported recently that the "best [investment] fund managers in the United States make $250 million a year". Petrol prices are going through the roof and consumers are suffering, but the large oil MNCs – Shell, BP, Texaco, etc. – are making tremendous profits. Again, the big stockholders are the main beneficiaries. The Saudi royal family – at the last count comprising 25,000 princes and princesses – shares tens of billion dollars of revenue among its members every year. It also distributes several billion dollars to the majority of Saudi citizens who find it beneath their dignity to work. Saudis, deep down, believe that it is Allah’s will (that is the irrational or mystical part of deep human beliefs that is seldom brought up in "serious" discussions). In the United States, the accumulation of extreme wealth began with the great entrepreneurs of the industrial age, such as Carnegie, Rockefeller, Guggenheim, Ford and Mellon, who built immense fortunes and have come to be known as Robber Barons.(4 Today, in the post-industrial age, the movement is accelerating: the number of billionaires is growing rapidly. A larger number appear to be in the ‘growth’ telecommunications industries (not only in the US – Google, Yahoo, Microsoft – but also, increasingly, in China and India.
One of the main reasons the accumulation of extreme wealth is tolerated, even welcomed, in the wealthy developed countries of the West is that it is a boon for the business elites and the governments (tax revenue). The accumulation of extreme wealth supports (in addition to banking and the legal profession) an extremely profitable industry of luxury goods and services. To give an extreme example, the price of the 2,800 square feet "presidential suite" in one of the top five-star hotels in Geneva is 30,000 Swiss francs (about US$23,000) per night. Similar facilities exist in all the major capital cities of the world: London, Paris, New York and Tokyo. Watches, expensive jewellery, yachts that cost tens of thousand of dollars are selling very well. All rich and developed countries paetake in the feast but some countries -- like Switzerland, Luxemburg and Monaco -- specialize in the extremely profitable provision of luxury goods and services.
So, extreme wealth is increasing while extreme poverty persists for the billion or so people who live on less than a dollar a day (and three billion people, close to half the world’s population, on less than $3 a day). Is there any – economic, social, philosophical or metaphysical – justification for it? Or has this situation reached intolerable levels and must be stopped? To provide tentative answers to these two questions, I propose that we return to Aristotle.
In Ethics, one his great books, the great Greek philosopher develops his Doctrine of the Mean which "determines Virtue". The Mean (or Golden Mean, as it later came to be known) is somewhere (not necessarily centred) between Excess and Deficiency. Courage, for example, is the mean between the excess of Rashness and the deficiency of Cowardice, Temperance, between the excess of Licentiousness and the deficiency of Insensibility. So, if we applied Aristotle’s doctrine to Wealth, virtuous wealth, so to speak, would be the mean between the excess of Wealth and the deficiency of poverty.
To begin with, we need to define the two concepts Excess of Wealth and Deficiency of Poverty. There is no problem insofar as the latter in concerned. Welfare agencies in rich countries define Deficiency of Poverty as an income level below a certain threshold or boundary, which varies, of course, depending on whether a country is rich or poor. In the United States it may be $20 a day, while in Burkina Faso it is $1 a day, per person. The definition of Excess of Wealth is more difficult for the simple reason that it has, to our knowledge, never been attempted. Why is this? Could it be because in the capitalist world, especially in the United States, excessively wealthy people increasingly control the media and the government? In the absence of reliable estimates, we are obliged to attempt a definition ourselves. The question is: How much wealth should be defined as "Excessive Wealth" (in US dollars)? There are a few hundred billionaires in the world, a few thousand individuals whose "net worth" varies between one hundred million and a billion dollars, and tens of thousands of persons, if not hundreds of thousands, whose wealth ranges between ten million and a hundred million dollars. All of these categories are growing rapidly. Very tentatively, we could perhaps place the boundary of Excessive Wealth at, say, between ten and twenty million dollars ) and the boundary of Excessive Income between one and two million dollars a year.
Things that matter most in the world have limits. Life itself has a limit. Happiness and Suffering have limits. So do Joy and Sorrow, and even Love and Hatred. Thus, there appears to be no reason ) except human selfishness and greed ) why the accumulation of Excessive Wealth by a small (but growing) number of individuals should be an exception to that cardinal rule. We now realise that, to survive as a species on Planet Earth, mankind must overcome selfishness and greed, two of its worst traits of character. In order to survive, humanity must create a better world based on Peace, Justice and Solidarity. Ultimately, one thing is increasingly certain, either we shall survive together as a species, or we shall disappear together as a species. Nobody in his right mind would want Albany’s prophecy in King Lear: "Humanity must perforce prey on itself. Like monsters of the deep," to become reality.
Founder of Millennium Solidarity Geneva Group (MSGG)
1) The topic of extreme poverty is ubiquitous and pervasive. Hardly a day passes without a major newspaper and academic-scholarly article about it. Several UN agencies – UNDP, UNCTAD, ILO, UNHCR, UNHRC, etc. deal with it. It is also one of the main preoccupations of all the religions, including the Catholic and Protestant churches (WCC), Islam and, of course the Eastern religions and philosophies like Buddhism. There is, presently, a world-wide campaign to eradicate extreme poverty in the world whose name is Global Call to Action against Poverty (G-CAP) launched by Civil Society Organisations (CSOs, also known as Non-Governmental Organisations, or NGOs) representing some 150 million people.
2) It is true that "Marx’s critique of 19th century capitalism, based on acute observation and analysis" was correct. It is the application of Marxism in the Soviet Union and China by Lenin and Mao that has failed, even though, as Carl Freeman observes: "But with all their faults, the communist revolutions in those countries nevertheless achieved modernisation and progress in many areas – albeit at excessive human cost … Today, leftist Cuba and Venezuela offer positive alternatives to the social degradation of other Latin American states (cf. Haiti)". I would like to thank Carl for reading an earlier draft of this paper and for providing comments and suggestions, several of which I incorporated in this text.
3) See on this burning subject, Anna Pha, ‘Capitalism’s loot and plunder’, in The Guardian of July 31, 2002
4) To be fair, these men, the Robber Barons, through the foundations that they created, gave back a large part of what they took from society, in the form of grants that improved the quality of life of the society as a whole. So they may have practised a cut-throat or bush capitalism to create the wealth, but they were also generous, sharing it with the American people. In the old days dominated by Monarchies, great wealth was concentrated in the royal courts. That situation continues presently in some of the remaining constitutional monarchies – in the United Kingdom and Netherlands, for example; also in Denmark, Spain, Norway and Sweden, and the principalities of Monaco and Luxemburg -- not to mention, the Kingdom of Saudi Arabia and the Emirates of the Persian Gulf. '
source: Of the two quotes at the beginning of the article'UN Human Development Report, 2005
(Dr. Zeki Ergas is a scholar, novelist, aspiring poet and occasional journalist. The holder of a Ph. D. in Political Economy and African Studies from Geneva University, he has taught at UC, Berkeley and Georgetown Universities. For the last ten years, Zeki Ergas, has been based in Geneva. During that last period he published the two books outlined below and wrote poetry which has won awards in Geneva and Basel. A third book, from the Balkans to Asia Minor. A Family Saga in the War Years of 1912-22 (Isis Press, Istanbul) has been completed. He is a member of Geneva Writers Group and International P.E.N).
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